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The payroll component is a very important part of a business, especially when it grows. And this can be time consuming and expensive. The payroll component can be one of the most complex tasks facing an organization. Besides the pays for employees, you must calculate taxes, upload reports and process information at the end of the year for tax reports. To determine which payroll system fits the best your company, consider the following issues:

Manual payroll

A company employee calculates the payroll each pay period entirely on paper. You must calculate the contributions to health, pension, unemployment, contributing to accidents, deductions, income tax, sick leave and so on, so as to arrive at the net salary of each employee.

The advantage of using a manual payroll system is the very low costs – just the salary paid to the employee who has these tasks. The disadvantages are the major risks of human error (with high penalties), the absence of centralized data on which to relate and the difficulty to process data as the number of employees increases. There are templates for payroll, but it is very difficult to process payroll manually.

Computerized payroll

Many companies offer software solutions for payroll. You will enter the information for each new employee, but the software will be the one that automatically calculates contributions and tax deductions. And, where needed, special situations such as sick leave, maternity leave or child care leave.

The advantages are numerous: fewer potential mistakes and less time spent for payroll. Employees can easily be trained to run payroll software so you will not depend on one person. However, disadvantages still exist – every information must be entered manually and require software update frequency, as are changes in legislation. In addition, the software must be configured specifically for your business.

This type of pay can work in two ways:

1. Payroll software rental;
2. Buying license.

1. If you rent the software, the main component will be located on the company’s proprietary server and you will only need to install a local customization kit. If there are legislative changes, the company from which you have rented the software should make available for you an updated kit that you should reinstall.

2. When you buy a license for a payroll software, you should think that there are other hidden costs: maintenance and service.

External payroll

The payroll can be processed for you by an external company, including payment of all fees and generating reports at the end of the month and of the year. In addition, a payroll service can offer access to data related to pays and holydays to the employees.

Although this option may pay more expensive at first, the benefits are immediately visible and there is a damping on medium term. Data is secure and centralized, you can immediately track cost per employee / department and is the responsibility of the company to whom you outsourced the payroll to process and collect timesheet and thus to do an accurate salary calculations for each employee.

Obviously, the best payroll type for you depends on the size of business and how long you want to have an employee with an exclusive task, such as payroll. The complex payroll is, – employees with various types of contracts – the higher is the need for outsourced payroll.